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OpinionBronwyn Maddox
13 Dec 2018 10:54am

Why the era of ambitious global deals is over

The international treaties and institutions formed after the Second World War are unravelling. There will be consequences for trade, the environment and security. The best hope is that new, smaller deals help compensate

US president Donald Trump’s determination to pull the US out of “bad deals” and to write new ones has been one of the shoutiest themes of his first two years in the White House. But the trend he articulates so loudly was clearly visible before him: the fraying of the treaties and institutions set up after the Second World War, and the US’s reluctance to be the anchor (and banker) of them.

It won’t stop with him, whether he’s president for four or eight years (the prospect that it might be less than four has receded, as there seems no possibility of impeachment with the Senate remaining in Republican hands after the November midterm elections). The era of ambitious global deals is over, whether in trade, the environment, or security.

That could be immensely damaging to global growth and prosperity. Jean Pisani-Ferry, the distinguished French academic, in the annual Wincott Lecture held recently at Chatham House, argued that “coalitions of the willing” – smaller deals – will spring up to fill the vacuum. He is right that this is worth trying for – and that it would be wrong to give in to nostalgia. But there is a need to adapt to a world where relations between countries are much less formally organised.

Take trade deals. The World Trade Organisation was created in 1995 but has not managed to secure any new global deals. The Doha round of negotiations, which began in 2001, is still technically “open” – uncompleted – but stalled on clashes between richer and poorer countries, particularly over agriculture.

Regional agreements have taken the place of these efforts. But as economists have long observed, these can act as impediments to free trade more generally, if they erect trade barriers between their members and the rest of the world. Some would point to the European Union itself as an example of this. The Brexit negotiations show, too, how bilateral discussions – between the UK and EU – can complicate existing trade deals, such as the agreement between Switzerland and the EU.

Long before Trump’s appearance in politics, and his distaste for existing trade deals such as Nafta and the proposed Trans-Pacific Partnership, or his scepticism about Nato, the US had been cooling on its support for international pacts and institutions.

It pulled out of the Kyoto protocol on climate change in 2001, severely weakening it. Successive administra- tions have (with some justice) seen the United Nations General Assembly as a forum for America-bashing. “We’ve won all these wars for you Europeans,” said one US general to me at the time of the 1999 Kosovo war (offering an idiosyncratic but by no means rare view of 20th century history).

“Why don’t you win some for yourselves?” Trump is not the first US president to complain that his country shoulders the vast majority of Nato’s funding and capability.

We should brace ourselves for more of these institutions and treaties to unravel. (Trump’s latest target is the Cold War era treaty on intermediate nuclear weapons with Russia). As polls show, many Americans are deeply sceptical that the value to them of anchoring the “rules-based international order” outweighs the costs and obligations. They don’t want to be the “world’s policeman” – still how many see the Iraq invasion – and they don’t want to pay for it.

This view isn’t found only in the US. Many countries have seen the rise of scepticism about globalisation, and a more protectionist mood. It’s a hard
Account manager: Advertising: Picture editor: time for politicians to persuade their people of the value of global deals, or big institutions run by technocrats. Meanwhile, the sheer complexity of international relations in the past 30 years, with more countries demanding a loud voice in such pacts, acts against the creation of new ones.

But it would be too sunny a view, I think, to imagine that new deals will organically spring up without encouragement. Among other reasons, China is actively forging its own networks of influence, sometimes binding countries into that through deals that leave them with unpayable debt, forming what looks like “coalitions of the unwilling” in some cases.

The best hope is that there are enough regional or bilateral deals on trade and the environment to begin to compensate for what looks like the inevitable loss of the old ones.